Legal Cases: Merck & Co. v Smithkline Beecham Pharmaceuticals

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1 . ORDER

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EXTRACTED KEY WORDS

UNITED STATES
MARKETING
VACCINE
CANADA
COUNTERCLAIMS
COURT
CHANCERY
CASTLE COUNTY
REASONS SET
MARKETING VARICELLA
PERMISSION
REGULATORY AGENCIES
JURISDICTION
COUNTRIES
JUDGEMENT
PLAINTIFF

   IN THE COURT OF CHANCERY OF THE STATE OF DELAWA.RE

                       IN AND FOR NEW CASTLE COUNTY



MERCK & CO., INC.,                           >>
              Plaintiff,                     >>
       v.                                    >      C. A. No. 15443-NC
                                             >
SMITHKLINE BEECHAM                           >
PHARMACEIJTICALS CO.,                        >
SMITHKLINE BEECHAM HOLDINGS                  )
CORPORATFON, SMITHKLINE                      >
BEECHAM CORPORATION, and                     1
SMITHKLINE BEECHAM                           >
BIOLOGICALS S.A.,                            >

              Defendants.                    )

                                   ORDER

       For the reasons set forth in this Court's Opinion entered in this case

on this date, it is

       ORDERED that defendants are enjoined from marketing varicella

vaccine in the United States and Canada for a period of three years from the

date defendants receive permission from all regulatory agencies having

appropriate jurisdiction within the United States and Canada to market such

vaccine in these countries; and



      FURTHER ORDERED that judgment is entered in favor of plaintiff

and against defendants on all of the defendants' counterclaims and such

counterclaims are dismissed.



                                                                 -
                                   Chancellor

SNIPPETS:

IN THE COURT OF CHANCERY OF THE STATE OF DELAWA.RE

IN AND FOR NEW CASTLE COUNTY

For the reasons set forth in this Court's Opinion entered in this case

ORDERED that defendants are enjoined from marketing varicella

vaccine in the United States and Canada for a period of three years from the

date defendants receive permission from all regulatory agencies having

appropriate jurisdiction within the United States and Canada to market such

FURTHER ORDERED that judgment is entered in favor of plaintiff

and against defendants on all of the defendants' counterclaims and such

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2 . OPINION (REDACTED) Below is text extracted from the first page of the corresponding document. The documents which you purchase will more closely resemble the original paper documents.	EXTRACTED KEY WORDS MERCK CELL PRODUCTION VARICELLA VACCINE DEP DIDELEZ VIRUS COURT DEFENDANTS TRADE SECRET OKA STRAIN CULTURE MO1 COMMERCIAL PRODUCTION BSA PLAINTIFF SMITHKLINE BEECHAM DELAWARE INFECTED CELLS LABORATORY NONEXCLUSIVE RIGHTS BULK VACCINE FBS KINETICS VIRAL PASSAGE CELL SHEET TAKAHASHI CULTURE MEDIUM INFECTION
/wu " F ---`,- 0 I 4 FILED UNDER SEAL PURSUANT TO ORDER OF THE COURT IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE IN AND FOR NEW CASTLE COUNTY -- MERCK & CO., INC., Plaintiff, > V. 1 C. A. NC,. 15443-NC > - SMITHKLINE BEECHAM > PHARMACEUTICALS CO., ) -_ SMITHKLINE BEECHAM HOLDINGS ) - : CORPORATION, SMITHKLINE > BEECHAM CORPORATION, and ) SMITHECLINE BEECHAM -_ . .I . > BIOLOGICALS S.A., >> . Defendants. 1 OPINION Date Submitted: June 29,1999 Date Decided: August 5, 1999 Richard D. Allen, Mary B. Graham, Julia Heaney and Bradley J. Enna, of MORRIS NICHOLS ARSHT & TUNNELL, Wilmington, Delaware; OF COUNSEL: Paul I?. Matukaitis and Kevin J. McGough, of MERCK & CO., INC., Rahway, NJ; Attorneys for Plaintiff. Richard IS, Hemmann and Mary B. Matterer of BLANK ROME COMISKY & MCCAULEY LLP, Wilmington, Delaware; Donald R Dunner, Susan H. Griffen, Howard W. Levine, John R Alison and York M, Faulkner of FINNEGAN HENDERSON FARABOW GARRETT & DUNNER LLP, Washington, D.C.; OF COUNSEL: James K. Grasty, Yuriy P. Stercho, of SMITHKLINE BEECHAM, Philadelphia, PA; Attorneys for Defendants. CHANDLER, Chan@lor ~`. TABLE OF CONTENTS' SNIPPETS: IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE MERCK & CO., INC., Richard D. Allen, Mary B. Graham, Julia Heaney and Bradley J. Enna, of MORRIS NICHOLS ARSHT & James K. Grasty, Yuriy P. Stercho, of SMITHKLINE BEECHAM, Philadelphia, PA; Attorneys for SB m Ob&hd &&m&onjvm CYIini& lnvctiigcrron &out M&k's Vaccine.. I find in favor of plaintiff Merck on its claim of misappropriation of a trade secret and I Inc. seeks to enjoin Defendants SmithKline Beecham BSA: albumin is the major protein in serum and serves as a carrier to the c&s of the other CeU culture: growing cells as `%ost" 4s for virus in an artificial environment (e.g. Growth or cell culture medium: mixture of sugars, salts, amino acids, vitamins and other l Kinetics: refers genekaily to the split ratios and harvest times of the viral passages. MO1 (multiplicity of infection): ratio of infectious units to uninfected celh at the idiation SB speaks of spIit ratio as a ratio of the surface area of infected cell sheet to the cell Citations in the form `Tr._** refm to the trial tra&pt and "dep. harvested material to make bulk vaccine (Tr. A commercial production process for making a vaccine must be able to In both the research laboratory and subsequent development, Complicutions in Making Varicella Vaccine The varicella virus has characteristics that make the infected cells are broken, the varicefla virus remains attached to the cell debris. Biken 3 Development and Licensing of the Oka Strain of Varice& Virus The Oka strain wicella Takahashi of the Research Institute (Tr. rights in the United States and Canada became exclusive, and Merck received nonexclusive large-scale commercial production process" (Didelez dep.
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3 . PUBLIC VERSION OF MERCKS POST-TRIAL REPLY BRIEF Below is text extracted from the first page of the corresponding document. The documents which you purchase will more closely resemble the original paper documents.	EXTRACTED KEY WORDS PUBLICATION DEFENDANTS PRODUCTION PROCESS MERCK TRADE SECRET PUBLICATIONS DISCLOSE EVIDENCE WASHING COURT MISAPPROPRIATION CONFIDENTIALITY DEFENSE COMMERCIAL PROCESS PATENT VARICELLA VACCINE KNOW-HOW PLAINTIFF SMITHKLINE BEECHAM HOLDINGS EXPLANATION HIGH BSA ADOPTION ASSERTION CLARIFICATION INJUNCTION GENERAL WELDING POST-TRIAL OPENING TESTIMONY PENNSYLVANIA LAW INCORRECT
IN THE COGRT OF CHANCERY- OF THE STATE OF DELAWARE IN AND FOR NEW CASTLE COUNTY MERCK & CO., INC., Plaintiff, j C.A. No. 15443NC SMITHKLINE BEECHAM PHARMACEUTICALS CO., : SMITHKLINE BEECHAM HOLDINGS CORPORAXON, ; CONFIDENTIAL SMITHKLINE BEECHAM CORPORATION and j INFORMATION OF SMITHKLINE BEECHAM BIOLOGICALS &A., ; SB, BIKEN AND 1 MERCK REDACTED Defendants. PUBLIC VERSION OF MERCK'S POST-TRIAL REPLY BRIEF j -- MORRIS, NICHOLS, ARSHT & TUNNELL Richard D. Allen Mary B. Graham Julia Heaney Bradley J. Enna 1201 N. Market Street OF COUNSEL: P.O. Box 1347 Wilrnington, DE 19899- 1347 Paul D. Mahlkaitis (302) 6589200 Kevin J. McGough Attorneys for Plaintiff MERCK & CO., INC. P.O. Box 2000 Rahway, NJ 07065-0907 June 28, 1999 Original Dated: May 18, 1999 i. TABLE OF CONTENTS Page TABLE OF CITATIONS .111 ARGUMENT 1 SNIPPETS: SMITHKLINE BEECHAM HOLDINGS CORPORAXON,; CONFIDENTIAL Defendants. MERCK & CO., INC. P.O. Box 2000 THE BIKEN PRODUCTION PROCESS IS A TRADE No Evidence Supports SB's New Explanation. SB Had Not Solved Its Problem Of High BSA Or Pfu's Came From Adoption Of Biken's Washing The Publications Disclose No Information SB's "Publication" Defense Is Legally Biken's process satisfies all the elements of a trade secret -- it is valuable, I Citations in the form "OB " refer to pages of Merck's Post-Trial Opening Brief, "A " to the only entity at that time to have succeeded in producing varicella vaccine for the SB made this assertion for the first time in its Pre-Trial Brief Misappropriation occurs where trade secret information of another is In the event the Court must choose between the UTSA and the Restatement, SB's argument that l-32) is incorrect, and essentially rests on a single fact -- one defendant is a Pennsylvania The other relevant factor on choice of law, the place where the parties' relationship is SB's "Publication" Defense Is Without Merit. commercial process that was developed in the 1980's by people other than on n,ashing cell sheets and clarification by centrifkgation (SB Br. offered no testimony that one skilled in vaccine production could reach any At trial, it attempted to have D'Hondt testify on publications, and pending before the Court he simply testified that what is in the patent has been "published" (Tr. General Welding and Fabricating; and that all of the specific information the plaintiff claimed as simply removes a confidentiality obligation to the extent Biken information ceases MERCK IS ENTITLED TO AN INJUNCTION.
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4 . PUBLIC VERSION OF MERCKS PROPOSED FINDINGS OF FACT AND CONCLUSIONS OF LAW CONCERNING MERCKS CLAIMS OF MISAPPROPRIATION OF TRADE SECRETS Below is text extracted from the first page of the corresponding document. The documents which you purchase will more closely resemble the original paper documents.	EXTRACTED KEY WORDS VACCINE DEFENDANTS VARICELLA VACCINE PRODUCTION COURT TRADE SECRET CELLS LAW VIRUS LYOPHILIZATION MAKING VARICELLA VACCINE OKA PLAINTIFFS CYCLE MISAPPROPRIATION COMPLICATION BIKEN KNOW-HOW CELL CULTURE PRODUCTION PROCESSES LICENSING INFECTED CELLS LABORATORY BEECHAM HOLDINGS CORPORATION CONFIDENTIALITY PROPOSED FINDINGS MANUFACTURING PUBLICATION AGREEMENT SPLIT RATIO
IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE IN AND FOR NEW CASTLE COUNTVI LIERCK & CO., INC., Plaintiff, C.A. No. 15443NC v. S\`lITHKLINE BEECHAM PHARMACEUTICALS CO., ; SklITHKLINE BEECHAM HOLDINGS CORPORATION, : CONFIDENTIAL SMITHKLINE BEECHAM CORPORATION, and INFORMATION OF SMITHKLINE BEECHAM BIOLOGICALS S.A., SB, BIKEN AND MERCK REDACTED Defendants. PUBLIC VERSION OF AIERCK'S PROPOSED FIYDINGS OF FACT ~ - AXD CONCLUSIONS OF LAW CONCERWING MERCK'S CLAI>IS OF >IISAPPROPRIATIOY OF TR4DE SECRETS _ r- ? L. ._" MORRIS, NICHOLS, ARSHT & TUNNELL Richard D. Allen Mary B. Graham OF COUNSEL: Julia Heaney Bradley J. Enna Paul D. blatukaitls 1201 N. Market Street Kuin J. McGough P.O. Box 1347 41ERC'K 8r C-O., INC. Wilmmgton, DE 19899- 1347 P.O. Box 2000 (302) 658-9200 Rah\\ a>`. NJ 07065-0907 &4ttomeys for Plaintiff June 28, 1999 Orlginal Dated: May 26, 1999 TABLE OF CONTENTS Tz\BLE OF CITATIONS iv PROPOSED FINDINGS OF FACT 1. BACKGROUND, SNIPPETS: IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE SklITHKLINE BEECHAM HOLDINGS CORPORATION,: CONFIDENTIAL AXD CONCLUSIONS OF LAW CONCERWING MERCK'S PROPOSED FINDINGS OF FACT Vaccine Production Processes. Complications In Making Varicella Vaccine. E. Biken's Development And Licensing Of The Oka SB'S EFFORTS TO MARKET ITS VARICELLA VACCINE IN THE UNITED STATES AIND CANADA CONSTITUTE SB Misappropriated Biken Know-How By UNDER ITS AGREEMENT WITH BIKEN, SB IS PROHIBITED FROM USING BIKEN KNOW-HOW TO PRODUCE A both dead and live virus -- measured in Elisa units. growing cells as "host" cells for virus in an artrficial environment (a laboratory or production). Growth or cell culture medium: SB speaks of split ratio as a ratio of the surface area of infected number of infected cells rather than surface area. cycle of virus growth in cell culture, Another complication is that only about one in a hundred the steps of breaking open the cells, clarification, and lyophilization, because the to which SB has made filings which include trade secret into a manufacturing process can constitute protectable trade secrets. the litigation its breach has generated) that the defendants Thilton patent" negated plaintiffs' trade secret claim, The three cases cited by SB to support its "publication" I confidentiality obligation to the extent Biken information ceases to be secret.
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5 . PUBLIC VERSION OF MERCKS PROPOSED FINDINGS OF FACT AND CONCLUSION OF LAW CONCERNING DEFENDANTS COUNTERCLAIMS AND "UNCLEAN HANDS" DEFENSE Below is text extracted from the first page of the corresponding document. The documents which you purchase will more closely resemble the original paper documents.	EXTRACTED KEY WORDS AGREEMENT MERCK CONFIDENTIALITY CLINICAL INVESTIGATORS OPTION PERIOD CONFIDENTIALITY OBLIGATION EXTENSION DEL STATUTE CONTINUED1 BREACH COURT TAKAHASHI OKA STRAIN VACCINE EVIDENCE OBTAINED INFORMATION DEFENDANTS WOODRUFF NEGOTIATIONS CONTRACT LEXIS INTERFERENCE LANGUAGE CLINICAL TRIALS CONCEALMENT PROSPECTIVE CONTRACTUAL RELATIONSHIP THIRD PARTIES ANDRE DEP
IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE IN AND FOR NE\ii: CASTLE COUNTY \lERCK & CO., INC.. Plamtiff, C.A. No. 15443NC SMITHKLINE BEECHAM PHARMACEUTICALS CO., SMITHKLINE BEECHAAM HOLDINGS CORPORATION, ~CONFIDENTIAL S\IITHKLINE BEECHAM CORPORATION, and INFORMATION OF SUITHKLINE BEECHAM BIOLOGICALS S.A., SB, BIKES ASD 3fERCK REDACTED Defendants. PC'BLIC VERSION OF 12ERCK'S PROPOSED FINDINGS OF FACT _ ASD COSCLL'SIONS OF L-4\\' COYCERYING ; DEFENDASTS' COUSTERCLAIMS _:3 ; AND "UNCLEAN HASDS" DEFENSE - , - . MORRIS, NICHOLS? ARSHT & TUNNELL Richard D. Allen Mary B. Graham OF COUNSEL: Julia Heaney Bradley J. Enna Paul D. 1LIatukaitis 1201 N. Market Street Ke\--in J. McGough P.O. Box 1347 &CLERCK 8i CO., INC. Wilmington, DE 19899- 1347 P.O. Box 2000 (302) 658-9200 Rahway, NJ 07065-0907 Attorneys for Plaintiff June 28, 1999 Original Dated: :%lay 26, 1999 TABLE IOF CONTENTS Paqe TABLE OF CITATIONS IL I. PROPOSED FTXDINGS OF FACT. SNIPPETS: Initial Problems Leading To An Extension Of The Merck Learned That Biken Expected To SB's Claims A4re Barred By the Statute of SB Has Failed To Prove Any Breach Of The Under The Agreement Ended SB's Clinical Investigators Were Not Subject To Any Confidentiality Obligations. ,4 Contract Or Expectancy Interest Justification For Any Interference. Olson, Del. LEXIS 109, Chandler, C., czfn, Cincinnati SIMS,4 Ltd. Partnership v. Cincinnati Bell Cellular TABLE OF CITATIONS (continued1 Biken's insistence on only a two-year Option Period indicates RIT and the defendants are collectively referred to herein as "SB". meet or negotiate at any time with third parties who were interested in a license. Dr. Takahashi is one of the "third parties" specifically named in the amended answer as Moreover, even if SB did not understand Merck's position, it is based solely on the language aware that Merck had approached Biken about receiving the Oka strain. They discussed aspects of Takahashi's vaccine published in the literature and Woodruff was given three unpublished papers. There is no evidence that SB viewed the contacts betw,een SB claims that "Merck fails to inform the Court" that the document specifically states that u'as not something that SB wanted to keep secret (Andre dep. Bikens' decision to continue to deal exclusively with SB presumably ~vas SB Slmilariy Obtained Information From as nell as the detailed results of clinical trials of iMerck's KMcC vaccme Biken immediately began negotiations with,Merck. HoLvever, concealment is not enough to toll the statute --there must be tiaudulent a breach of the contract or termination of the prospective contractual relationship: Biken's confidentiality obligation under the Option
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6 . PUBLIC VERSION OF MERCKS POST-TRIAL ANSWERING BRIEF CORRECTED VERSION Below is text extracted from the first page of the corresponding document. The documents which you purchase will more closely resemble the original paper documents.	EXTRACTED KEY WORDS OPTION AGREEMENT DEL VACCINE COMMUNICATIONS OBLIGATION COURT COUNTERCLAIMS EXTENSION UNCLEAN HANDS OKA STRAIN PLAINTIFF WOODRUFF DEFENDANTS RIGHTS INTERFERENCE TESTIMONY TAKAHASHI NEGOTIATIONS CONFIDENTIALITY DELAWARE LEXIS CLINICAL TRIALS CONTRACT NEGOTIATE CINCINNATI BELL CELLULAR UNITED STATES EVIDENCE LICENSING LIMITATIONS
IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE IN AND FOR NEW CASTLE COUNTY MERCK & CO., INC., Plaintiff, V. C.A. No. 15443NC SMITHKLINE BEECHAM PHARMACEUTICALS CO., SMITHKLINE BEECHAM HOLDINGS CONFIDENTIAL CORPORATION, INFORMATION OF SB, SMITHKLINE BEECHAM CORPORATION and MERCK AND BIKEN SMITHKLINE BEECHAM BIOLOGICALS $A., REDACTED Defendants. PUBLIC VERSION OF MERCK'S POST-TRIAL ANSWERING BRIEF IN OPPOSITION TO DEFENDANTS' COUNTERCLAIMS AND "UNCLEAN HANDS" DEFENSE CORRECTED VERSION MORRIS, NICHOLS, ARSHT & TUNNELL Richard D. Allen Mary B. Graham Julia Heaney Bradley James Enna 120 1 N. Market Street P.O. Box 1347 Wilmington, DE 19899- 1347 (302) 658-9200 Attorneys for Plaintiff OF COUNSEL: MERCK & CO., INC. Paul D. Matukaitis Kevin J. McGough P.O. Box 2000 Rahway, NJ 070650907 June 2, 1999 Original Dated May 19, 1999 1. TABLE OF CONTENTS Page SNIPPETS: IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE MERCK & CO., INC., IN OPPOSITION TO DEFENDANTS' COUNTERCLAIMS AND "UNCLEAN HANDS" DEFENSE Delays Leading To An Extension Of The Option Of The Option Agreement And Continued Any Confidentiality- Obligation Under The A Contract Or Expectancy Interest Known To The Cincinnati SMSA Ltd. Partnershin v. Cincinnati Bell Cellular Svs. No. 15388, 1997 Del. LEXIS 133 at *ll-12, counterclaims of tortious interference and unjust enrichment, based on communications rights to the Oka strain. Merck's vaccine without Merck's consent. testimony of Dr. Huygelen of SB who said that he was not particularly upset when SB and SB encountered additional difficulties with the Oka strain Merck had spoken with Takahashi at a conference in Atlantic City and thereafter wrote e Onnon Aereement And Contmued Negotiations. SB at that- time was marketing no vaccines in the United States and had withdrawn its rubella Merck OT Biken from performing clinical trials of their vaccines. there is no evidence to suggest Merck had any other reason.6 As SB claims that Hilleman's receipt of this information in 1979 was pursuant to "the precise of whichever company was going to have licensing rights in the United States. SB's claim that "Biken could not negotiate with any one else" (SB Br. BIKEN DID NOT VIOLATE ANY CONFIDENTIALITY .- ~:LIMITATIONS AND LACHES. begins to run at the time of the alleged wrongful act, "even if the plaintiff is ignorant of
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7 . MERCKS POST-TRIAL ANSWERING BRIEF IN OPPOSITION TO COUNTERCLAIMS Below is text extracted from the first page of the corresponding document. The documents which you purchase will more closely resemble the original paper documents.	EXTRACTED KEY WORDS OPTION AGREEMENT DEL VACCINE COMMUNICATIONS OBLIGATION COURT EXTENSION OKA STRAIN COUNTERCLAIMS PLAINTIFF UNCLEAN HANDS WOODRUFF FACTS SMITHKLINE BEECHAM DELAYS RIGHTS INTERFERENCE TAKAHASHI NEGOTIATIONS DEFENDANTS LEXIS CLINICAL TRIALS TESTIMONY NEGOTIATE CONFIDENTIALITY FRAUDULENT CONCEALMENT CINCINNATI SMSA LICENSING LIMITATIONS
IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE IN AND FOR NEW CASTLE COUNTY MERCK & CO., INC., Plaintiff, C.A. No. 15443NC V. SMITHKLINE BEECHAM PHARMACEUTICALS CO., SMITHKLINE BEECHAM HOLDINGS CORPORATION, PUBLIC VERSION SMITHKLINE BEECHAM CORPORATION, and SMITHKLINE BEECHAM BIOLOGICALS S.A., Defendants. PUBLIC VERSION OF MERCK'S POST-TRIAL ANSWERING BRIEF AND APPENDIX IN OPPOSITION TO DEFENDANTS' COUNTERCLAIMS AND "UNCLEAN HANDS" DEFENSE MORRIS, NICHOLS, ARSHT & TUNNELL Richard D. Allen Mary B. Graham Julia Heaney Bradley James Enna 1201 N. Market Street P.O. Box 1347 Wilmington, DE 19899-1347 (302) 658-9200 Attorneys for Plaintiff, Merck & Co., Inc. OF COUNSEL: Paul D. Matukaitis Kevin J. McGough MERCK & CO., INC. P.O. Box 2000 Rahway, NJ 07065-0907 Dated: May 10, 1999 Sealed version filed: April 26, 1999 TABLE OF CONTENTS SNIPPETS: IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE SMITHKLINE BEECHAM HOLDINGS CORPORATION, PUBLIC VERSION PUBLIC VERSION OF MERCK'S POST-TRIAL ANSWERING BRIEF AND APPENDIX IN OPPOSITION TO DEFENDANTS' COUNTERCLAIMS AND "UNCLEAN HANDS" DEFENSE MERCK & CO., INC. P.O. Box 2000 Delays Leading To An Extension Of The Option Of The Option Agreement And Continued Any Confidentiality- Obligation Under The Cincinnati SMSA Ltd. Partnershin v. Cincinnati Bell w, Del. LEXIS 133 at *ll-12, counterclaims of tortious interference and unjust enrichment, based on communications rights to the Oka strain. SB omits any mention of numerous facts established by its own Merck's vaccine without Merck's consent. testimony of Dr. Huygelen of SB who said that he was not particularly upset when SB and SB encountered additional difficulties with the Oka strain Merck had spoken with Takahashi at a conference in Atlantic City and thereafter wrote The Option Ameemeni And Continued Negotiations. good faith and not to negotiate with third parties" (SB Br. Merck or Biken from performing clinical trials of their vaccines. "the precise mechanism that Dr. Takahashi and Dr. Woodruff `cooked up' in order for Merck to of whichever company was going to have licensing rights in the United States. BIKEN DID NOT VIOLATE ANY CONFIDENTIALITY LIMITATIONS AND LACHES. begins to run at the time of the alleged wrongful act, "even if the plaintiff is ignorant of Under Delaware law, that doctrine applies only where, as the Pack court found, the injuries
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8 . ANSWERING BRIEF IN OPPOSITION TO MERCKS POST TRIAL OPENING BRIEF

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EXTRACTED KEY WORDS

COURT
PRODUCTION
TRADE SECRET
MERCK
VARICELLA VACCINE
MISAPPROPRIATION
DIDELEZ
DELAWARE
HOLDING
CIR
OKA STRAIN
KNOW-HOW
PATENT
OPENING
SUPP
TESTIMONY
SMITHKLINE BEECHAM
PHARMACEUTICALS
PUBLISHED-IS
OPTION AGREEMENT
CLINICAL TRIALS
UNITED STATES
ACCORDINGLYF
DEFENDANT
PLAINTIFF
PUBLIC DOMAIN
RESTATEMENT
MANUFACTURING PROCESS
COMMERCIAL PROCESS

              IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
                               IN AND FOR NEW CASTLE COUNTY

MERCK & CO., INC.                                                 )1
                                Plaintiff,                        )1
        V.                                                        1     Civ. A. No. 15443 NC
                                                                  )
SMITHKLINE  BEECHAM PHARMACEUTICALS CO., )
SMITHKLINE BEECHAM HOLDING CORPORATION, )
SMITHKLINE BEECHAM CORPORATION, and                               1     PUBLIC VERSION
SMITHKLINE BEECHAM BIOLOGICALS S.A.,                              ))
                                Defendants.                       )

               SB'S ANSWERING BRIEF AND APPENDIX IN OPPOSITION
                          TO MERCK'S POST TRIAL OPENING BRIEF


                                        SMITHKL,WE  BEECHAM  PHARMACEUTICALS CO.,
                                        SMITHKLINE  BEECHAM HOLDING CORPORATION,
                                        SMITHKLINE BEECHAM  CORPORATION, and
                                        SMITHKLINE  BEECHAM  BIOLOGICALS S.A.

Of Counsel                              Richard K. Herrmann #405
                                        Mary B. Matterer #2696
James K. Grasty, Esq.                   BLANK ROME COMISKY & MCCAULEY LLP
Yuriy P. Stercho, Esq.                  Chase Manhattan Centre
SmithKline Beecham                      120 1 Market Street, Suite 2 100
1 Franklin Plaza                        Wilmington, DE 1980 1
Philadelphia,   P.A.  19101             302-524-6400

                                        Donald R. Dunner, Esq.
                                        Susan H. Griffen, Esq.
                                        Howard W. Levine, Esq.
                                        FINNEGAN, HENDERSON, FARABOW,
                                              GARRETT & DUNNER, L.L.P.
                                        1300 I Street, N.W.
                                        Washington, D.C. 20005
                                        202-408-4000

Dated: May 3, 1999
Sealed version filed: April 26, 1999



                                        TABLE OF CONTENTS

                                                                                                   

I.     I N T R O D U C T I O N . . . . . . . . . . . . . . . . . . . . . . . . . . , . , . . . . .

SNIPPETS:

IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE

SMITHKLINE BEECHAM PHARMACEUTICALS CO.,) SMITHKLINE BEECHAM HOLDING CORPORATION,)

TO MERCK'S POST TRIAL OPENING BRIEF

SB's Experience in Vaccine Production.

5 B. SB and Biken Enter into an Option Agreement

Regarding the Oka strain.

and Performing Clinical Trials in the United States.

Vaccine Without Biken's Assistance

C*. Biken's So-called Know-How Cannot Constitute Trade Secrets.

Merck Published Biken's Know-how With Biken's

Constitute a Trade Secret is Seriously Flawed

But Assert Misappropriation Broadly Is Legally

Varicella Vaccine in the United States after August 1999.

46 American Airlines, Inc. v. KLM Royal Dutch Airlines, Inc., 114 F.3d 108 (8th Cir.

Combined Metals of Chicago Ltd. Partnership v. Airtek, Inc., 985 F. Supp.

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9 . SBS POST TRIAL BRIEF Below is text extracted from the first page of the corresponding document. The documents which you purchase will more closely resemble the original paper documents.	EXTRACTED KEY WORDS OPTION AGREEMENT UNCLEAN HANDS COURT DEFENSE WORLDWIDE EXCLUSIVE LICENSE DEL VARICELLA VACCINE OKA STRAIN INTERFERENCE CONFIDENTIALITY COUNTERCLAIMS NEGOTIATING CLINICAL TRIALS CONTAMINATION TAKAHASHI LIMITATIONS SMITHKLINE BEECHAM SMITHKLINE BEECHAM HOLDING AFFIRMATIVE DEFENSE EXERCISES IRS OPTION EXCLUSIVE RIGHTS LEXIS TORTIOUS INTERFERENCE PROSPECTIVE CONTRACTUAL RELATIONSHIP SAFETY DATA OBTAINING LITIGATION MERCK CONTENDS MYCOPLASMA
IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE IN AND FOR NEW CASTLE COUNTY MERCK & CO., INC. )) Plaintiff, 1) V. ) Civ. A. No. 15443 NC ) SMITHKLINE BEECHAM PHARMACEUTICALS CO., ) SMITHKLINE BEECHAM HOLDING CORPORATION, ) SMITHKLINE BEECHAM CORPORATION, and 1 PUBLIC VERSION SMITHKLINE BEECHAM BIOLOGICALS S.A., )) Defendants. 1 SB'S POST TRIAL BRIEF ON COUNTERCLAIMS AND AFFIRMATIVE DEFENSE OF UNCLEAN HANDS SMITHKLINE BEECHAM PHARMACEUTICALS CO., SMITHKLINE BEECHAM HOLDING CORPORATION, SMITHKLINE BEECHAM CORPORATION, and SMITHKLINE BEECHAM BIOLOGICALS S.A. OfCounsel Richard K. Herrmann #405 Mary B. Matterer #2696 James IS. Grasty, Esq. BLANK ROME COMISKY & MCCAULEY LLP Yuriy P. Stercho, Esq. Chase Manhattan Centre SmithKline Beecham 1201 Market Street, Suite 2100 1 Franklin Plaza Wilmington, DE 19801 Philadelphia, P.A. 19101 302-524-6400 /_ Donald R. Dunner, Esq. Susan H. Griffen, Esq. Howard W. Levine, Esq. . FINNEGAN, HENDERSON, FARABOW, i : : 1::; GARRETT & DUNNER, L.L.P. -... 1300 I Street, N.W. Washington, D.C. 20005 202-408-4000 Dated: April 9, 1999 Sealed version filed: March 30, 1999 TABLE OF CONTENTS I. PJTRODUCTION SNIPPETS: IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE SMITHKLINE BEECHAM PHARMACEUTICALS CO.,) SMITHKLINE BEECHAM HOLDING CORPORATION,) AFFIRMATIVE DEFENSE OF UNCLEAN HANDS The Option Agreement Provided SB with an Option to Receive a Worldwide Exclusive License and SB Exercises irs Option and Begins Negotiations for A Worldwide Exclusive Agreement. Merck Obtained Information Regarding the Oka Strain and Atrempted to Disrupt SB's Option F. SB Continued to Perform Clinical Trials,. Merck Is Barred from Obtaining Equitable Relief in the Instant Litigation Due to the Docbine E. Merck's Actions Were a Significant Reason Why Biken Terminated rhe Option Agreement and G. SB was Damaged By Merck's Interference. LEXIS 1.5497 (ED. Pa. ..--..f...I..................................,,..,,,.,.,.,, 57.58 Brodiey v. Jones, Del. manufacturing an Oka strain varicella vaccine, negotiating with Biken over t&h@+ to ti. by Dr. Takahashi were contuminated and rendered unusable by "mycoplasma.`~--C-Mycopiasma are children if it is contaminated by mycoplasma. For this reason, SB questioned whether rhe contamination occurred befare RIT received the as Merck contends that as Biken's exclusive li&n&e in [clonversely an assignee's right against the obligor is subject to all of the limitations of and counterclaims which would have been available against the assignor had there been no Merck's Actions Constitute Tortious Interference With Contract 2 breach of the contract or termination of the prospective contractual relationship;
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10 . BRIEF Below is text extracted from the first page of the corresponding document. The documents which you purchase will more closely resemble the original paper documents.	EXTRACTED KEY WORDS TRADE SECRET DEFENDANTS KNOW-HOW COURT MISAPPROPRIATION PLAINTIFF VARICELLA VACCINE OPTION AGREEMENT PRODUCTION OKA STRAIN COMMERCIALIZATION FAILED EFFORTS PRIOR INFERENCE DEL VIRUS UNITED STATES REFERENCES NEGOTIATIONS SMITHKLINE BEECHAM SALSBURV LABS MANUFACTURING TAKAHASHI HOST CELLS SUCCESSFUL LICENSING INTERFERENCE LABORATORY MATUKAITIS KEVIN HINDSIGHT
f'"' 7.. 0 ,`,? " ;> i' ,,ri 12, g sir ; b kU>$ u k L' J-; IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE IN AND FOR NEW CASTLE COUNTY MERCK b CO., INC., Plaintiff, V. iC.A. No. 15443NC SMITHKLINE BEECHAM PHARMACEUTICALS CO., i SMITHKLINE BEECHAM HOLDINGS CORPORATION, iPUBLIC VERSION SMITHKLINE BEECHAM CORPORATION, and I SMITHKLINE BEECHAM BIOLOGICALS.S.A., ; . r \ ., Defendants. MERCK'S PRE-TRIAL BRIEF ; ' ,' _ _ _ ,- J ,' : . P. .- `, `. _L -- Cl -I.. MORRIS, NICHOLS, ARSHT & TUNNELL Richard D. Allen Mary B. Graham Julia Heaney Bradley J. Enna Richard H. Cross, Jr. 1201 N. Market Street P.O. Box 1347 Wilmington, DE 19899-1347 (302) 658-9200 Attorneys for Plaintiff OF COUNSEL: Paul D. Matukaitis Kevin J. McGough MERCK & CO., INC. P.O. Box 2000 Rahway, NJ 07065-0907 Dated: February 16, 1999 Sealed version filed: February 3, 1999 SNIPPETS: IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE SMITHKLINE BEECHAM HOLDINGS CORPORATION, iPUBLIC VERSION Paul D. Matukaitis Kevin J. McGough MERCK & CO., INC. P.O. Box 2000 Biken's Know-How To Guide The KNOW-HOW IN THE UNITED STATES AND Miles Inc. v. Cookson America, Inc., Del. SB'S TRADE SECRET MISAPPROPRIATION Backqround On Varicella Vaccine. Varicella Virus. vaccines are made using two main ingredients, host cells Production Processes. reproducible on a regular basis in the manufacturing The Oka strain varicella virus was originally isolated by Dr. Takahashi of Biken from a Japanese child any successful commercial process. SB's Failed Efforts Prior To 1985 had been unsuccessful, SB continued to try to use production, rather than laboratory Salsburv Labs., Inc. v. Merieux Labs., Inc., 735 F. Supp. Hindsight Should Not Be Used To trade secret defendants to argue that a process is - In short, it is onlv because the defendants have been exposed to Zimmern's method that thev plaintiff had established the existence of a trade secret, Inference Of Misanoronriation. In licensing its Know-How to Merck and SB, "legal rights" of SB arising from its Option Agreement After that meeting there were further negotiations Biken's desire to expedite commercialization of its F. Merck's Alleged Interference.
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11 . BRIEF

Below is text extracted from the first page of the corresponding document.
The documents which you purchase will more closely resemble the original paper documents.

EXTRACTED KEY WORDS

OPTION AGREEMENT
OKA STRAIN
MERCK
COURT
TRADE SECRET
TAKAHASHI
CONTAMINATED SAMPLES
DEL
TRADE SECRET MISAPPROPRIATION
CLINICAL TRIALS
CIR
UNITED STATES
SMITHKLINE BEECHAM
INDIVIDUAL ELEMENTS
INTERFERENCE
BIKEN EXTEND
UNCLEAN HANDS
COMMERCIAL PROCESS
PRODUCING
WORLDWIDE EXCLUSIVE LICENSE
OBLIGATIONS
TRADE SECRET CLAIM
LIMITATIONS
SUCCESSFUL
SAMPLES DISRUPTED TIMING
ALLEGED TRADE SECRETS
DISCLOSURE
PRODUCTION
PLAINTIFFS

              IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
                              IN AND FOR NEW CASTLE COUNTY

MERCK & CO., INC.                                                   ))
                               Plaintiff,                           11
        V.                                                          )     Civ. A. No. 15i43  NC
                                                                    )
SMITHKLINE BEECHAM PHARMACEUTICALS CO., )
SMITHKLINE BEECHAM HOLDING CORPORATION, )
SMITHKLINE BEECHAM CORPORATION, and                                 1     PUBLIC VERSION  -.
SMITHKLINE BEECHAM BIOLOGICALS S.A.,                                11
                               Defendants.                          1


                               DEFENDANTS' PRETRIAL BRIEF


                                          SMITHKLINE BEECHAM PHARMACEUTICALS CO.,
                                          SMITHKLINE BEECHAM HOLDING CORPORATION,
                                          SMITHKLINE BEECHAM CORPORATION, and
                                          SMITHKLINE BEECHAM BIOLOGICALS S.A.

Of Counsel                                Richard K. Herrmann #405
                                          Mary B. Matterer #2696
James K. Grasty, Esq.                     BLANK ROME COMISKY & MCCAULEY LLP
Yuriy P. Stercho, Esq.                    Chase Manhattan Centre
SmithKline Beecham                        1201 Market Street, Suite 2100
1 Franklin Plaza                          Wilmington, DE 1980 1
Philadelphia, P.A. 19 10 1                302-524-6400

                                          Donald R. Dunner, Esq.
                                          Susan H. Griffen, Esq.
                                          Howard W. Levine, Esq.
                                          FINNEGAN, HENDERSON, FARABOW,
                                             GARRETT & DUNNER, L.L.P.
                                          1300 I Street, N.W.
                                          Washington, D.C. 20005
                                          202-408-4000

Dated: February 11, 1999
Sealed version filed: February 3, 1999



                                           Table of Contents


INTRODUCTIOti . . , . . . . . . . . . . . . . . . . . .  .  .  .  .  .  ...**.....*.*..*.....*.. 1
STATEMENT OF FACTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . : . .

SNIPPETS:

IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE

SMITHKLINE BEECHAM PHARMACEUTICALS CO.,) SMITHKLINE BEECHAM HOLDING CORPORATION,)

Dr. Takahashi Provides Contaminated Samples of

SB's Development of an Oka Strain Varicella Vaccine.

E. Contaminated Samples Disrupted Timing of the

F. SB and Biken Extend the Option Agreement.

G. Biken Required SB to Begin Clinical Trials

Oka Strain During the Negotiation Period

K. SB's 1985 Commercial Process.

MERCK'S INTERFERENCE WITH THE OPTION AGREEMENT AND THE 1982 LICENCE AGREEMENT THAT WAS

Maintain the Secrecy of the Individual Elements

E. SB's Obligations Under The 1982 SB/Biken Agreement

United States in 1993-94 Are Not Actionable

Disclosure of Previously Disclosed Information

Does Not Constitute Trade Secret Misappropriation

Statute of Limitations and the Doctrines of Lathes

MERCK POSSESSES UNCLEAN HANDS,

F.2d 3 14 (7th Cir.

CPM Industrial, Inc. v. Fayda Chemicals & Minerals, Inc., Del.

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Legal Cases: Merck & Co. v Smithkline Beecham Pharmaceuticals